Chief executive of Intel Corp. believes that the incoming and inevitable transition to manufacturing using 450mm wafers will reduce the number of semiconductor companies by half. Naturally, the outgoing Intel boss is confident that the firm will successfully undergo all changes.

“I do think there are a number of transitions coming up in this decade. We’ve got transition to 450mm [wafers] at some point; we’ve got a transition to EUV at some point. Both are going to be expensive and are going to require scale. In general, every time there has been a wafer-size change in the industry, only half of [design and production] market players [survived],” said Paul Otellini, CEO of Intel, at Sanford Bernstein technology conference.

The reason why the head of Intel is so optimistic about the success of the transition to 450mm and EUV manufacturing is clear and simple: the company has been on the development forefront of both technologies. Moreover, this year Intel invested into ASML, a leading maker of semiconductor manufacturing equipment. As a result of getting a stake in ASML, Intel gets almost full control of the transition to 450mm wafers and extreme ultraviolet (EUV) lithography.

“I think we are likely to see the structure of the industry to dramatically change in the next four or five years. It is clear to me that Intel will be viable on the other side of that [transition to 450mm],” said Mr. Otellini.

Given the volumes Intel produces now and keeping in mind that it is in process of a great expansion into the growing markets of smartphones and media tablets, transition to 450mm wafers is a logical decision for Intel. Thanks to large volumes and large wafers, Intel will reduce its production costs, something that it needs to better compete against its new rivals that belong to the ARM camp.

It is necessary to note that Intel expects smaller players, such as fabless developers of chips and actual makers of chips, to extinct as a result of transition to 450mm and EUV, a bad signal for companies with stagnating or declining sales. At the same time, the extinction of smaller players will not make the life of Intel easier as the company will face stronger competitors with high ambitions.